What to Consider When Making Big Purchases
Splurging on a pricey new car can make sense if you follow a few simple rules.
Bloomberg, October 4, 2020
Count me out of the “Financial Independence/Retire Early” movement. I can’t imagine retiring in your 30s or 40s brings happiness or life satisfaction. Worse, the claims of the FIRE proponents do not work well for helping the average person manage their finances. Instead, they tend to be grossly exaggerated or oversimplified.
As such, I am not a fan of bold pronunciations about spending, like: Never buy a boat! Stop drinking lattes! Don’t buy a new car! They seem designed more to attract attention than impart wisdom. I prefer rational guidelines that help consumers make better spending decisions. Overbroad rules of thumb do not serve anyone’s interest, and are often wrong except at the extremes.
Consider this better approach to big-ticket purchase decisions:
1. Have a Budget.
2. Prioritize Your Purchases.
3. Don’t engage in mindless consumerism.
4. Determine Your Actual Needs:
5. Understand what will – and will not – bring you joy.
The full column can be seen here.